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Many people have asked the question if a bank can be a guarantor. The question has a lot of relevance to them as they are aware that they can save a lot of money by paying their bills with the help of a guarantor.
However, they do not know if it is possible for them to get the bank to be their guarantor. In this article, we will look at some factors that you should consider before deciding on a guarantor, as well as whether a bank can be one.
Can a Guarantor Be a Bank?
The simple answer is no, they cannot. Usually, a guarantor would be an individual who is at least 21 years of age and has a good credit rating.
The reason is that a guarantor is expected to be able to pay back the money that they are lending to you if you default on your payments. Whether you’re deciding on who should be your guarantor, or pondering on whether you should take up a request to be someone else’s guarantor, it’s very important to consider a few factors.
The Duties of a Guarantor
A guarantor is required to be a person who is financially capable of making the payments that you owe. They are also required to be financially stable and have good credit ratings. The reason for this is that they are expected to be able to pay back the money that you owe if you default on your payments. In most cases, the guarantor is also expected to make up for any shortfall in the payment when you do not pay them back.
Reasons for Needing a Guarantor
The main reason for needing a guarantor is that you do not have the funds to pay your bills. This can be because you have been injured and your medical bills are very high, or you are having financial difficulties and need to get a loan to cover them.
You might also be required to be a guarantor if you do not have enough money to pay your rent or mortgage. You may also need a guarantor if you cannot make the payments because of being unemployed. The main reason for needing a guarantor is that you cannot afford the payments on your own.
Choosing a guarantor can be a fickle thing. It’s a lot of responsibility to put on someone, so you need to be sure that you are choosing the right person. A good credit history is great, but it’s equally important that they’re someone you can trust as a whole. It is not rare that these types of deals can sever a once tight-knit relationship due to failures to complete payments in time.
How Being a Guarantor Affects You
If you yourself are the guarantor, then you should be aware that this does affect your credit rating. While you are likely to have a good credit rating before becoming a guarantor, it is possible that your credit rating could drop if you do not pay the money back. It’s also very important to note that once you’ve signed the legal papers as a formal agreement to become someone’s guarantor, you are not able to back away!
